Does $60,000 a year make you middle-class or wealthy on Planet Earth?
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For that reason, $60,000 could either be a ton of money ($4,000 a month in post tax wealth accumulation is really good), or very little at all.
There are still some Europeans and plenty of Asians and Africans making less than $250 a month. If you are spending all of your income, you aren't terribly different from them in the end.
When you consider that most suburban land about 1hr outside city by car can go for even just $20,000, it seems pretty ludicrous to pay $400,000 for something that can be had for $50,000.
The ONE thing stopping this from being a reality is the town government/mortgage lender junta.
They've basically made it illegal in most metropolitan areas to purchase anything other than a big, rotting house.
Isn't this the point. Most people don't want to live 1hr away, so are forced into more expensive land.
I'm not sure if driving is any faster, but maybe not, when parking and walking (if in-building parking is unavailable or prohibitively expensive).
That means it could still be a full hour away. That intra-SF travel by transit motor vehicle could be slower than coming from outside the city could be a quirk specific to SF, something I mentioned in another thread [1].
It's nimby rules passed by the municipal government causing the problem.
The free market would be a huge step up. Whatever other problems it has, it's good a building new stuff.
[1] For a durable shelter nice enough for guests...assuming this means an actual house, modestly outfitted... There's site prep, foundation materials and labor, plumbing/elec work, hookup fees, development fees, permit fees, lawyer, real estate fees, appliances, furnishings, all in addition to the actual structure and land materials and labor cost.
Most people think that houses are expensive. They are, but in developed areas the land itself plays are large role. (That's why the top three important factors in real estate are location, location, and location. It's not that much more expensive to build a structure in San Francisco than Bakersville.)
So it's unlikely that in most suburban areas it will make economic sense to build a only 700 sq ft house on a entire quarter acre. At that point, a duplex/quadplex makes far more market sense. And a duplex/quadplex is cheaper to build per resident.
America's obsession with single family homes is doing incalculable amounts of damage. It prevents people from moving to better opportunity and sucks up wage gains.
If that were true then the landlord wouldnt be able to pay the mortgage. I think rent is mortgage + taxes + insurance + potential repairs + profit
It does. When you start a mortgage, interest is around 90% of the payment. So by definition mortgage is virtually all interest.
True, later the amount of interest goes down, but that's just a detail - the amount of money tied up in the house is what matters, not the accounting in your bank.
Nobody who has to compete with others gets to set a price based on their costs.
Sure they can. They can set whatever price they want. And on the other side of the coin, the available pool of renters can choose to pay that price or not pay that price.
No one is going to charge 90% less than they are able to (except in charity cases). It goes against human nature.
Read on "opportunity cost of money".
They could rent that way, and some people do: People who just want things simple and don't care that much about getting the most money. If you are a renter your goal is to try make this happen, by being so easy for your landlord that he's willing to do this for you (it usually ends up as him never raising the rent, over time this reduces your cost because of inflation). Things like never calling him with problems, always paying the rent on time without being reminded, stuff like that. (Doesn't always work of course, it depends on your landlord.)
But anyway, normally people try to maximize the value of their money. So they'll take that money locked up in principal and go buy another house and rent that out.
Each time they pay off enough of their mortgage they'll go buy something else. Over time you'll have a large fleet of houses, and a nice income.
Or, you can take that principal and invest in anything else. Or even just live off of it (it's your profit after all).
That's the simple, boring, way to make money in real estate. You basically multiply your money each time you buy another house. You start young, and don't make much. By the time you are older you have a steady income.
Some do. It shouldn't affect the rent price.
> People don't get to arbitrarily set their prices at cost plus profit etc.
Sure they do. They offer rent at a whatever price they choose, and that price is either rejected or accepted.
Rent (for the same property) should be MORE than the cost of a mortgage (for the same property).
The owner is taking on both risk and maintenance costs.
Now, if you're saying "monthly rent on a 2 bedroom apartment should be cheaper than a monthly mortgage payment on a 5 bedroom house", that's different...
Even the most expensive markets there are a huge range of options. Today in NYC you'd be hard pressed to find your own private place for $1000/month. That wasn't true as recently as 5-6 years ago, but it is now. On the other hand you can find a very decent place for $1500/month. You won't be in Manhattan or the cool parts of Brooklyn, but you will be safe and comfortable.
$1500/month is still only 30% of gross on $60,000/year which leaves plenty of disposable income even in high tax NYC.
Maybe SF is worse, but if so that's the only place in the whole rest of the country that's worse.
The issue becomes when you "need" more bedrooms. Or insist on certain neighborhoods.
$650 is about a week's pay for me, so I make less than $60,000 for sure. But food and transport are things, and so is the occasional medical care or movie.
I live pretty frugally and can typically save $1,000 per month. But in this area, inflation and rising cost of living will virtually guarantee it's a meaningless amount 30 years from now.
so it reaffirms an actual holistic challenge to the financial ecosystem is a long ways off and basically never going to happen.
It's hard to even support a family on that in the Midwest (been there).
ProTip: Use VRBO or other vacation rental sites rather than airbnb.